Rupee might appreciate to 58-59 a dollar this week

May 12, 2014 08:31 IST

The rupee is expected to appreciate beyond 60 a dollar this week, if the outcome of the Lok Sabha elections is in line with the Street’s expectations. The Bharatiya Janata Party-led National Democratic Alliance is leading in opinion polls. If it wins, as is being expected, the rupee would hit 58-59 a dollar, according to currency experts.

The rupee ended marginally stronger on Friday after hitting a one-month high, owing to dollar buying by the Reserve Bank of India.

“If there is a decision mandate in line with market expectations, the rupee could appreciate to 58 a dollar. Even if it goes below this level, it may not sustain. But a decisive mandate can put a strong cap of 61 per dollar, beyond which the rupee may not depreciate,” said Mohan Shenoi, president (group treasury and global markets) at Kotak Mahindra Bank.

The rupee ended at 60.03 on Friday, compared to the previous close of 60.06. Government bond yields are seen falling as flows from foreign institutional investors (FII) will pick up in debt instruments.

“The yield on the 10-year bond may fall to 8.70 per cent due to FII flows in debt,” said N S Venkatesh, executive director and head of treasury at IDBI Bank.